After a year of almost never ending Covid and Brexit gloom the emergence of strong vaccine candidates from Pfizer and Moderna – with Britain’s AstraZeneca not far behind – has finally begun to lift hope on global financial markets. When lives are in danger and there is constant broadcast chatter about the dangers of not reaching a trade deal with the EU it is easy to get down in the dumps.
But it is worth recording that it is less than a year ago that Boris Johnson’s government won a resounding 80-seat majority on the back of Brexit optimism and that, with the right policies, the potential of the UK economy can again be unleashed.
Admittedly, the task is harder now. The pandemic will wipe up to 10% off national output this year. And the pandemic has left a toxic legacy in the shape of public borrowing of £400bn this year and national debt of £2 trillion – or the same amount as the UK’s GDP.
Yet, as I outline in my new book The Great British Reboot, there is no reason to be pessimistic. It is fashionable to mock the concept of ‘Global Britain’ which was at the heart of the UK’s debate about leaving the EU. But the truth is that there has been an enormous shift in the global economy with more than 50% of global output moving to the Asia-Pacific region.
The Covid pandemic may have started in China and Asia but it has been a case of first in and first out. That’s why Britain, with its rich heritage of global trading, has a real opportunity to make new links to the just formed Trans-Pacific Partnership.
Since Britain joined the European Economic Community (EEC) in 1975 the nation’s whole focus has been aligning our economy with our closest neighbours. But that laser focus, while it has delivered prosperity and higher living standards, has pre-occupied policymakers and parts of business.
The reality is that the UK’s best global companies recognised long ago that the single currency had rendered the EU sclerotic, and they have chosen to reach well beyond the continent to Asia, the Middle, East, Africa and the Americas. Firms such as food and beauty giant Unilever, pharmaceutical pioneers AstraZeneca and drinks giant Diageo went global long before Brexit.
There is a terrible tendency to underestimate Britain’s brilliance in fields ranging from gaming to movie production and design. The UK is largely a services economy but that does not just mean haircuts, coffee shops and gyms, as you might deduce from some of the headlines.
The dynamism of the UK’s financial services sector employing more than 2.2 million people, accounts for upwards of 7% of GDP and earning trade surpluses of £60bn a year is unparalleled. It is fashionable to argue that without the European passport, the ability of UK-based banks and financial firms to carry on business in the EU unhindered, the City of London’s role as an international financial centre will be greatly undermined.
Nothing could be further from the truth. The City’s resilience as a financial sector stems from its skill in adapting. It is no accident that trading in the Chinese currency the Renminbi already exceeds that of the euro in London. It is also important to note that the UK, deploying the software skills emanating from our great research universities, already employs 25,000 technicians and engineers in fast-developing financial technology companies such as Monzo, Revolut, Atom and Starling banks.
Indeed, the UK is home to four of the world’s top 20 research universities Oxford, Cambridge, Imperial and UCL all of which along with others such as Southampton have played a leading role in combatting the pandemic. The Oxford Jenner Institute has been working alongside AstraZeneca on a vaccine which could be in production by the end of the year. Scientists at UCL designed a lighter, kinder ventilator mid-pandemic and scientists from Southampton came up with smart therapeutics which have saved lives in the second wave.
The UK’s scientific endowment is also seen in companies such as smart chip champion Arm Holdings, which is an outgrowth of Cambridge, and in the UK’s aerospace sector. Buyers are still lining up for the Tornado Eurofighter assembled by BAE and propelled by Rolls-Royce engines. And work is underway on its stealth successor the Tempest, a tribute to the World War 2 fighter bomber of the same name.
Creativity is not confined to science labs, aerospace and the City. The UK has a world-leading creative sector. The most obvious exponents of this are writers such as JK Rowling – a one person global phenomenon – and musical artists such as Adele, Ed Sheeran and Stormzy. They are just the tip of a creative sector that accounts for up to 10% of GDP and embraces architecture and design.
Backed by the right levels of technical training and more generous research and development budgets the UK has the opportunity to regain the kind of global reach it had in Victorian times. But in the modern era carrying with it the policies of diversity, tolerance and social equality embraced at all levels of society. With application, willpower, vision and creativity, all is possible.
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